Covid’s Omicron variant and some likely repercussions

‘The global risk from the new Omicron coronavirus variant is “very high”, the World Health Organization warned… Tedros Adhanom Ghebreyesus, the WHO’s director-general, said on Monday that Omicron highlighted “how perilous and precarious our situation is” as he delivered an address to the World Health Assembly.’ – Excerpts from the November 29, 2021 published Financial Times (FT) article ‘WHO warns of ‘very high’ risk from new Omicron coronavirus variant.’

While it still remains to be seen as to how dangerous the new variant is what is important though for policymakers is to increase the spread of Covid-19 vaccines, especially to global south, and in particular Africa where the vaccine coverage is particularly low as compared to the rest of the world. The rich, advanced countries will have to understand that new and most probably more potent variants are likely to keep emerging as long as vaccine inequality remains. A recent Fatima Hassan-authored article ‘Omicron: vaccine nationalism will only perpetuate the pandemic’ published by Al-Jazeera highlights this aspect as: ‘Unsurprisingly, hoarding huge swaths of the global vaccine supply has enabled the emergence of dangerous new variants of COVID-19. …If we do not want Covid-19 to continue exacerbating the racist and colonial world order, we need change. And believe it or not, it would benefit the UK and Europe, too. Because you cannot impose rigid policies or build high enough walls to keep the consequences of vaccine inequality out. ... We need solidarity and cooperation, not knee-jerk travel bans.’

Here, the negative role of keeping intact intellectual property rights (IPRs), which resulted in lack of much-needed speed in manufacturing vaccines, should have been done away with at least for the duration of the pandemic. In this regard, a November 29, 2021 Guardian article ‘Developing nations may give up on the WTO for good if it won’t budge on vaccine patents’ highlighted in particular the highly objectionable role of Europe and ‘unhindered market’ phenomenon in removing IPRs. It argued, among other things, that ‘The Omicron variant is the inevitable result of European strategy. Experts have been warning for months that failure to vaccinate most of the world is the best way to ensure the spread of new and potentially dangerous Covid-19 variants, some of which could undermine even the vaccines we have created. …But the WTO stands at the apex of a trade system which rules that nothing should get in the way of “the market”. An unhindered market is all we need… Covid-19 is the proof that this is a fallacy. It has shown us that the market cannot solve a crisis. In fact, the market has ensured the rich and powerful get many times what they need while the poorest get virtually nothing. Meanwhile, two medicines alone – the Pfizer and Moderna vaccines – are making the companies behind them $1,000 (£749) per second in profit.’

On the other hand, rather than fixing vaccine inequality, the global north continues to impose harsher restrictions on countries where new variants emerge, reducing the prospects of economic recovery in these countries, as pointed out by Fatima Hassan. According to her, ‘rich countries are punishing the victims of global vaccine inequality by slamming shut the borders to anyone from southern African nations. Of course, the Omicron variant, as the World Health Organization has named it, has not exclusively been found in Southern Africa. Cases have been discovered in Asia and Europe, including in the UK, but the Global South is being blamed for it, while the means to deal with COVID-19 have been kept from it. This is perfectly fitting with how rich countries have dealt with the pandemic.’

The emergence of this new variant of high concern in particular is likely to halt the already slow rate of economic recovery of the global south. A recent Economist article ‘Three threats to the global economic recovery’ highlighted in this regard the following: ‘The emergence of a covid-19 variant, labelled Omicron, has sparked a wave of selling on financial markets, seemingly on concern that a new highly transmissible strain of the virus could set back economic recoveries worldwide. Yet even if Omicron proves manageable, 2022 will probably be an economically trying one, as countries are squeezed between two formidable economic forces: tighter American monetary policy and slower growth in China.’

At the same time, the same article highlighted the economic challenges to vulnerable economies posed by Omicron as follows: ‘The emergence of Omicron adds fresh uncertainty. Little is known yet about the economic damage that the variant might wreak. …Many currencies tumbled against the dollar amid a flight to safety. …If Omicron were also to depress trade and growth, then its spread would further amplify the pressures facing vulnerable economies. The sailing will be anything but smooth.’

(The writer holds a PhD in Economics from the University of Barcelona; he previously worked at the International Monetary Fund)

He tweets@omerjaved7

Copyright Business Recorder, 2021